Retail sales were mixed in July, with some chains posting stronger than expected same-store increases (albeit against weak prior-year numbers) while others lagged.


retail sales, July sales, Kantar Retail, senior economist Frank Badillo, Target Corp., president and chief executive officer Gregg Steinhafel, BJís Wholesale Club Inc., Costco Wholesale Corp., Duckwall-ALCO Stores Inc., Fredís Inc., chief executive officer Bruce Efird






























































































































































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Inside This Issue - News

New concerns raised by uneven July sales

August 22nd, 2011

NEW YORK – Retail sales were mixed in July, with some chains posting stronger than expected same-store increases (albeit against weak prior-year numbers) while others lagged.

Kantar Retail reported average same-store sales gains of 4.8% in July, based on its sales-weighted composite for the 28 retailers reporting (most of them apparel retailers). That is down from the 7.1% same-store sales gain recorded in June, but better than the 2.9% gain recorded in July 2010.

The results suggest that shoppers’ spending plans — including their back-to-school budgets — are showing renewed signs of duress.

"Most interesting in these numbers is that many retailers are reporting decent gains in apparel sales, which is a discretionary category that is often the first to suffer from the economic strains on shoppers’ confidence and spending intentions. That discretionary spending, however, is undoubtedly falling off most among lower-income shoppers hurt most by rising prices and a weak job market," said Kantar senior economist Frank Badillo.

The results were led by stronger than average results at food, drug and mass retailers, whose results (particularly at warehouse clubs) have been bolstered by higher food and fuel prices. Department stores followed in terms of performance, and apparel and accessory stores lagged modestly.

Target Corp. reported net retail sales of $4.8 billion for the four weeks ended July 30, which is an increase of 5.6%. Same-store sales rose 4.1%, beating analyst expectations.
"We’re very pleased with Target’s July sales performance, which again was at the high end of our expected range," said Target chairman, president and chief executive officer Gregg Steinhafel. "In addition, back-to-school sales are off to a solid start, contributing to our confidence in the strategies we have in place and our ability to execute them, especially as we head into the 2011 holiday season."

BJ’s Wholesale Club Inc. also handily beat Wall Street’s expectations, reporting a same-store sales gain of 9.2% for July. With gasoline sales excluded, same-store sales were up 5.4%. Total sales rose 12.4% to $854.8 million.

Costco Wholesale Corp. reported net sales of $6.7 billion for the month of July, an increase of 15% over sales in the prior-year period. Although results were hurt slightly by the fact that the Independence Day holiday, when U.S. clubs were closed, fell in July this year and June last year, resulting in one less day of sales this year, that effect was more than offset by the fact that this year’s results included sales from Costco’s joint venture in Mexico. Without them, the net sales gain for July would have been 12%.

Costco’s comparable-store sales gain for July was 6% in the United States and 22% overseas, or 10% for the entire company. Excluding gasoline sales and the effect of strengthening foreign currencies, Costco’s same-store sales advanced 3% domestically and 12% internationally, or 5% for the company as a whole.

Duckwall-ALCO Stores Inc. reported that comparable-store sales, excluding fuel, increased 7.2% in July. Total sales from continuing operations were up 7.6%, to $33.2 million. Company president and chief executive officer Rich Wilson, who noted that July marked six consecutive months of positive sales performance, attributed the gains to improved merchandise assortments, a stronger value proposition and better customer service at the 213 ALCO stores, which are located mainly in underserved small communities.

Fred’s Inc.’s sales for the month increased 1% to $129 million. Comparable-store sales receded 0.5%. That compares to the 2.7% comparable-store sales gain that the company reported in July 2010.

"July’s sales performance was consistent with the first two months of the quarter, as external economic factors, including high unemployment and reductions in government aid, continued to have a negative impact throughout the Southeast," says Fred’s chief executive officer Bruce Efird.

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